Business

Friday April 3, 2009

Boustead selling assets worth up to RM600mil


KUALA LUMPUR: Boustead Holdings Bhd is selling RM500mil to RM600mil worth of slow-moving and non-performing assets this year to better position itself for future investments.

Group managing director Tan Sri Lodin Wok Kamaruddin said the assets include its 17,000ha oil palm plantation in Sumatra, property land bank in Malaysia and 80%-owned BH Insurance Bhd.

“We want to focus on activities that generate healthy profit and prepare ourselves in the event there are good opportunities along the way, particularly in areas that we are good at.

Tan Sri Lodin Wok Kamaruddin

“If we have our funds ready, we will be in a better position (to make acquisitions),” he said after the company AGM yesterday.

Selling these non-performing assets would also reduce the group’s gearing ratio and improve cashflow, Lodin said, adding that it was in the midst of “very serious negotiations” to dispose of its insurance arm.

As at end-2008, Boustead had a gearing ratio (borrowings/shareholders’ equity) of 1.2 times, while its cashflow stood at RM614.7mil.

Lodin said the company decided to sell its plantations in Sumatra because of various challenges, including labour and transportation issues.

By disposing of this unproductive estates, Boustead would be able to increase its crop yield, he said.

On the other hand, the company is eyeing plantations in Sabah and Sarawak, as well as focusing on improving productivity and density of its existing plantations.

This year, it would replant 3% of its 92,000ha oil palm plantation.

Lodin projected that in the next four months, crude palm oil (CPO) price would remain at the current level. This is due to higher soyoil price and a cut in CPO inventory by 700,000 tonnes following the Government’s replanting initiative and by 500,000 tonnes from the introduction of biofuel.

CPO is now traded at about RM2,110 per tonne.

However, he expected the price to drop to RM1,800 at the end of this year due to increased production.

Meanwhile, Lodin said Boustead, which currently owns 320 BHP petrol stations, planned to build 10 to 15 more in the country this year.

“Our predecessor (previous owner) focused on urban areas but we will build more petrol stations outside the Klang Valley,” he said, adding that each kiosk would cost RM1mil to RM7mil.


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